Fiscal Policy: The View from the Street

FISCAL POLICY

On a recent Saturday evening in Manhattan, a slight, studious-looking man mixed among the Broadway crowds and occasionally buttonholed a theatergoer to ask his feeling about the state of business. Before the evening was over, he had polled nine theater lines, tactfully retreating from the few customers who bristled at his curiosity or wanted to know his name.

The anonymous pollster holds one of the world’s most powerful economic jobs and has stacks of statistics at hand —but he still believes in observing from life. William McChesney Martin Jr., chairman of the Federal Reserve Board, likes to make his own spot checks before joining in the major decisions that affect the U.S. economy. Before the Federal Reserve vote that increased stock margins to 70% a fortnight ago, he followed the same procedure, roaming the streets and offices of Manhattan.

Martin visited several brokerage offices, usually unrecognized, and decided, after eavesdropping on customers’ men advising their clients, that margin buying was being pushed too vigorously. He talked with Manhattan builders about the quality of real estate investments, and in visits to banks confirmed his controversial contention that there has been a deterioration in bank credit. “A couple of months ago,” he says, “they would have given a customer the cold shoulder. Now they’re scared someone will walk out without having signed up for a loan.”

A staff of 200 economists and statisticians pours a heavy flow of information into Martin’s office on the second floor of the closely guarded, white marble Federal Reserve building. Martin is properly appreciative, but still wants a feel for the economy that he cannot get in his marble palace in Washington. He relies heavily on his web of contacts in banking, Government and stock market circles, but also makes a point of chatting frequently with salesmen, shoeshine boys, hashslingers and foreign tourists, likes to prowl the lobby of Manhattan’s Waldorf in search of likely candidates for questioning.

When Martin tries to offset the statistics with such personal observations, his economists sometimes complain that he has not given enough weight to the staff’s figures. At such times, Martin likes to paraphrase G. K. Chesterton to show that he, too, takes his polling modestly: “A drunkard uses a lamp pole for support, not for illumination.”